(a) Department of Enforcement
With the prior written authorization of FINRA's Chief Executive Officer or such other senior officers as the Chief Executive Officer may designate, the Department of Enforcement
may initiate: (1) a temporary cease and desist proceeding with respect to alleged violations of Section 10(b) of the Exchange Act and SEA Rule 10b-5 thereunder; SEA Rules 15g-1 through 15g-9; FINRA
Rule 2010 (if the alleged violation is unauthorized trading, or misuse or conversion of customer assets, or based on violations of Section 17(a) of the Securities Act); FINRA
Rule 2020; or FINRA
Rule 4330 (if the alleged violation is misuse or conversion of customer assets) ("TCDO Proceeding") or (2) a permanent cease and desist proceeding with respect to alleged violations of Supplementary Material .03 to
Rule 5210 (PCDO Proceeding"). The Department of Enforcement
shall initiate the proceeding by serving a notice on a member or associated person (hereinafter "Respondent") (or upon counsel representing the Respondent, or other person authorized to represent others under
Rule 9141, when counsel or other person authorized to represent others under
Rule 9141 agrees to accept service for the Respondent) and filing a copy thereof with the Office of Hearing Officers. The Department of Enforcement
shall serve the notice by personal service, overnight commercial courier, facsimile, or email. If service is made by facsimile or email, the Department of Enforcement
shall send an additional copy of the notice by personal service or overnight commercial courier. Service is complete upon sending the notice by facsimile or email, sending the notice by overnight courier or delivering it in person, except that, where duplicate service is required, service is complete when the duplicate service is complete. The notice shall be effective when service is complete.
(b) Contents of Notice
The notice shall set forth the rule or statutory provision that the Respondent is alleged to have violated and that the Department of Enforcement is seeking to have the Respondent ordered to cease violating. The notice also shall state whether the Department of Enforcement is requesting the Respondent to be required to take action, refrain from taking action or both. The notice shall be accompanied by:
(1) a declaration of facts, signed by a person with knowledge of the facts contained therein, that specifies the acts or omissions that constitute the alleged violation;
(2) a memorandum of points and authorities setting forth the legal theories upon which the Department of Enforcement relies; and
(3) a proposed order that contains the required elements of an order (except the date and hour of the order's issuance), which are set forth in
Rule 9840(c), with respect to temporary cease and desist orders, and
9840(d), with respect to permanent cease and desist orders.
(c) Authority to Approve Settlements
If the Parties agree to the terms of the proposed temporary or permanent cease and desist order, the Hearing Officer shall have the authority to approve and issue the order.
(d) Filing of Underlying Complaint for Temporary Cease and Desist Orders
If the Department of Enforcement
has not issued a complaint under
Rule 9211 against the Respondent relating to the subject matter of the TCDO Proceeding and alleging violations of the rule or statutory provision specified in the notice described in paragraph (b), the Department of Enforcement
shall serve and file such a complaint with the notice initiating the TCDO Proceeding. Service of the complaint can be made in accordance with the service provisions in paragraph (a).
